- The SEC continues its scrutiny of crypto funds.
- New York-based firm Titan is the latest to feel the pinch.
- The SEC has issued penalties and arranged a settlement.
FinTech Investment Adviser Titan is the latest firm to feel the pinch of the regulatory crackdown by the U.S. Securities and Exchange Commission (SEC). In a press release dated August 21, the regulatory agency announced charges against Titan for allegedly flouting advertising and compliance regulations.
Unsuitable Employee Practices
According to the statement, the New York-based crypto fund acted in bad faith by running a website that perpetuated false claims regarding โhypothetical performance,โ contrary to the SECโs marketing regulation, which came into effect in December 2022.
Sponsored
โFor a period ranging from August 2021 to October 2022, Titan, which offers multiple complex strategies to retail investors through its mobile trading app, made misleading statements on its website regarding hypothetical performance, including by advertising โannualizedโ performance results as high as 2,700 percent for its Titan Crypto strategy,โ read the statement
The SEC asserts that Titan failed to promote suitable employee practices. Besides self-reporting to the commission that it failed to collect client signatures for certain types of transactions, Titan allegedly provided customers with conflicting crypto asset custody information.
The regulator noted that Titanโs employees used liability disclaimer language to create a false impression of clientsโ rights to legal action against the firm. The SEC complaint further underlined that the company failed to implement sufficient policies and procedures relating to employeesโ personal trading of crypto assets.
The Penalties
Neither confirming nor denying the charges, Titan has agreed to cooperate with the SECโs investigation team and will pay $850,000 in civil penalty, to be reimbursed to affected customers.
The crypto firm has further been issued a cease-and-desist order, a censure, and a $192,454 disgorgement.
Read how the SECโs oversight on crypto firms is impacting the U.S. digital assets industry:
U.S. Faces Real Threat of Crypto โBan by Enforcement:โ Chainalysis Policy Head
Here is what the SEC said about its enforcement of crypto exchanges:
Exchanges Were Warned: SEC ChaiAr Gensler Defends Crypto Crackdown